Gogo Stock is Ready to Take Off Higher

Airline broadband connectivity provider Gogo NASDAQ: GOGO stock has rebound despite the market sell-off on a blowout Q4 2021 earnings release. The world’s largest business aviation broadband provider is a post-pandemic winner as air travel recovers. However, the pandemic actually bolstered its business aviation segment as it saw an influx of high-net worth travelers that didn’t want to travel on commercial airlines. Further tailwinds are expected from the global 5G rollout and adoption, which is expected by the second half of 2022. The Company smashed its fiscal Q4 2021 earnings. Gogo hit record top line in full year 2021. Business aviation travel and connectivity remains very strong driven by the strong increase in data consumption from video-intense social and work-related applications. Prudent investors seeking exposure on the continued recovery of business aviation can watch for opportunistic pullbacks in shares of Gogo.

Q4 Fiscal 2021 Earnings Release

On March 3, 2022, Gogo released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported diluted adjust earnings-per-share (EPS) profits of $1.57 smashing consensus analyst estimates for profits of $0.09, by $1.48. Total revenues rose 18.9% YoY to $92.3 million versus $89.28 million consensus analyst estimates. Total ATG aircraft online rose 11% YoY hitting 6,400. Average monthly revenue per ATG aircraft online was $3,301, up 8%. Gogo provided inline guidance for fiscal 2022 revenues to come in between $380 million to $395 million versus $378.84 million. Adjusted EBITDA is expends in the range of $150 million to $160 million driven by 5G. Equipment revenue grew 11% to $23 million. Record service revenue rose 22% to $69.3 million. Total ATG aircraft online grew 112% reaching 6,400. Total AVANCE units online increased 46% to 2,504.

CEO Comments

Gogo CEO Oakleigh Thorne commented, "Demand for connectivity in business aviation, combined with the excellent performance of our AVANCE platform, are driving record sales of equipment and high-margin service plans for Gogo. We remain on track for commercial deployment of our 5G ATG network in the second half of 2022 which we expect to further accelerate our growth."

Long-Term Targets

Gogo expects compound annual growth rate of nearly 15% from 2021 to 2026. Annual adjusted EDITDA margin is nearing 50% in 2026. Free cash flow is expected to be approximately $125 million in 2023 and increasing to $200 million by 2025 driven by 5G.

Conference Call Takeaways

CEO Thorne highlighted 2021 achievements including scaling AVANCE shipments by 40% and rolled out business aviation’s first unlimited data and streaming plans. The Company turned in a positive quarterly income and EPS in Q3 2021 for the first time. Interest expense was reduced by more than $70 million. CEO Thorne noted, We entered the exciting 200,000 aircraft strong general aviation market, while there's serious partnership offering Gogo IFC on the G2+ Vision Jet. We are gaining traction in the underpenetrated light jet and turboprop markets. As evidenced by our recent announcement with the Pilatus fractional operator, PlaneSense, is installing our AVANCE L3 on their entire fleet of 46 PC-12s and PC-24s. We executed extremely well in our Gogo 5G project, including most recently completing a test that sets Gogo up for an on-time/on-budget commercial launch in the second-half of 2022. We also signed at Jet Edge in Duncan Aviation to 5G commitments that will help secure successful commercial launch.” The Company continues to penetrate and future proof of its AVANCE platform by growing its install base by 46% in 2021 which represents 39% of its ATG install base. Gogo also achieved a 96% equipment retention rate raising the rolling average equipment lifetime to 18 years. He also noticed the 38% increase in megabytes used per flight and a 29% increase in flights per day. This resulted in 2.5X customer requested plan upgrades. He concluded with details on his plans for 5G launch which included beefing up its ATG network, which is limited to the U.S. and Canada but geos have near global coverage.

GOGO Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provide a precise view of the price action playing field for GOGO stock. The weekly rifle chart peaked near the $19.49 Fibonacci (fib) level before collapsing to the $12.08 fib before rebounding. The weekly rifle chart uptrend has a rising 5-period moving average (MA) at $15.66 with weekly upper Bollinger Bands (BBs) at $18.09. The weekly 15-period MA overlaps the weekly market structure low (MSL) buy trigger at $13.17. The weekly stochastic is rising towards the 80-band. The daily rifle chart has a slow grinding uptrend with a rising 5-period MA at $17.36 followed by the 15-period MA at $16.23 with upper BBs at $20.13. The daily stochastic crossed back up at the high band above the 90-band. The daily 50-period MA support sits at $13.93 and 200-period MA at $13.47 with daily lower BBs near the $10.88 fib. Prudent investors can watch for opportunistic pullbacks at the $16.78 level, $16.13 level $15.21 fib, $14.39 fib, $13.17 weekly MSL trigger, $12.08 fib, $11.12 fib, and the $9.76 fib level. Upside trajectories range from the $20.62 fib level up towards the $27.37 fib level.